Non-profit 501(c)(3) consumer credit counseling services (CCCS) and agencies are heavily regulated under the federal law 26 U.S.C. § 501 and are exempt from taxation. These strict nonprofit company regulations keep the debt relief company in close-watch, which is why using a non-profit and certified debt counseling agency is often a safe route to getting out of debt. However, consumer credit counseling programs only consolidate credit card payments and reduce interest rates, making this type of debt relief one of the more expensive options. It is important for a person to explore all debt relief options before deciding on consumer credit counseling unless you’ve already done your research and know that credit counseling is what you need.

A Certified Credit Counseling Agency Must: 

  • be licensed in the state that it operates, insured and bonded
  • NOT offer any type of loan unless it’s a loan that has 0% interest and fees associated with it
  • must have a physical address and not use a PO Box
  • be an IRS 501(c)(3) organization
  • offer full disclosure and information required by the FTC
  • educate consumers on their best financial debt solutions
  • provide a comprehensive budget analysis for each client
  • provide clients a complete plan to get out of debt
  • maintain an excellent BBB rating and respond to a complaint within 10-business-days
  • have a board of directors where the majority of the board are not employed or related to the consumer credit counseling staff, upper management and owners, and who are just regular consumers from the general public (maximum of 49 percent can be employed by the organization or benefit from it)

How Much Does it Cost For Credit Counseling?

By law, certified credit counseling agencies can only charge a maximum of $75 for the setup fee and $50 as the monthly maintenance fee. However keep in mind, credit counselors also get paid by the credit card companies.

Consumer credit counseling companies work for your creditors, not just you.

Need credit counseling? Consumers can get free information here at!

Are All Nonprofit Credit Counseling Companies Reputable? 

Some companies use their non-profit status to avoid regulations. For example, a credit counselor may also offer credit repair services and avoid the rules enforced by the Credit Repair Organizations Act, [15 U.S.C. §§ 1679 et seq.] by becoming non-profit 501(c)(3).

Even non-profit companies will take advantage of consumers, charge hidden fees and not always do the right thing. The job of a reputable credit counselor is first to provide a full budget analysis and then educate consumers on all debt reduction options.

Since non-profit consumer credit counseling companies operate as a 501(c)(3), these companies are not supposed to charge high fees, but often will still charge fees in excess to the $75 maximum start-up fee and the $50 per month maintenance fees. Some non-profit consumer credit counseling companies raise capital and stay in business by donations and using grants, while other companies will charge a small monthly fee. Just because it’s a non-profit debt consolidation plan, doesn’t mean it’s a person’s cheapest way to become debt free. Depending on your situation, you may be better off using a debt settlement or even a debt validation program, where you could end up paying less than the full balance owed on each debt.

To find a reputable credit counseling or debt relief company, search review websites like the Better Business Bureau (BBB), Yelp and here at Trusted Company Reviews (TCR). You can find real client reviews and learn the truth about a company by checking its online customer reviews. In 2018, Golden Financial Services was awarded the top debt relief company by Trusted Company Reviews. This company can provide you with a free consultation to help you learn about each of your debt relief options for free, and compare each plan side by side. Golden Financial is one of the few debt relief companies that offer multiple programs and plans to get out of debt. Their staff  is educated, IAPDA certified and overall has some of the best online reviews out of any debt relief company we’ve evaluated.

CLICK HERE to Apply for Consumer Credit Counseling & Debt Relief Near Me

Consumer Credit Counseling Agencies That Reduce Credit Card Interest Rates

A consumer credit counseling agency offers two types of programs. The main program that a consumer credit counseling company offers is a debt reduction plan for reducing credit card interest rates. A person can have a certified credit counseling company negotiate with their creditors to reduce the interest rates by as much as 50% in some cases. Often, 25% interest rates will get reduced to 10%. Credit counseling agencies have pre-established relationships with creditors, which is how they can provide you with a savings quote during your initial call to them. Another huge benefit of consumer credit counseling is that late fees can be waived and accounts re-aged to current, helping a person’s credit score.

A person makes one consolidated monthly payment, and the CCCS then disburses the funds every month to each credit card company but at the reduced interest rate and payment. Your entire credit card debt gets paid back with this type of program, but you can save money on interest and can become debt free in around 4.5 years.

Is Credit Counseling bad for your credit?

Although a person remains current on monthly payments with consumer credit counseling and accounts can even get re-aged to current on payments, doesn’t mean a person’s credit won’t be affected. A third-party notation goes on a person’s credit report after they sign up for a consumer credit counseling plan. This notation says “this person is enrolled in a consumer credit counseling plan” next to each credit card debt that’s enrolled in the program. Future lenders may look down upon a mark like this.

Before deciding on consumer credit counseling, first learn about all of the credit card relief programs available for 2018.

Consumer Credit Counseling Pre-Bankruptcy Certification

This second program offered by a credit counseling agency is for bankruptcy applicants only. If you are filing for Chapter 7, 11 or 13 bankruptcy, you will be required to get “financial education” from a certified budget and credit counseling agency. Their objective should be to help you avoid bankruptcy by using debt consolidation to consolidate your credit cards into one more affordable monthly payment. At we highly recommend only using a credit counselor who’s accredited with the National Foundation for Credit Counseling (NFCC) or The Association of Independent Consumer Credit Counseling Agencies (AICCCA).

To file for bankruptcy, you need to get a certificate of completion to show that you’ve taken this CCCS pre-bankruptcy class. Not every credit counseling company can offer you this certification. To find a government or state-approved credit counseling agency to help you file for bankruptcy and provide you with the required certification, start by reading this excellent bankruptcy resource here.

Is Consumer Credit Counseling a good idea?

If your goal is to become debt free fast, there are multiple debt relief options to consider. Depending on if you can afford to pay more than the minimum payment, or if you can’t afford even to pay minimum payments, will determine your best option. The debt snowball and avalanche method to paying off debt are the two best options to use if you can avoid using a program altogether and afford to pay more than the minimum monthly payments. If you have a high credit score and sufficient income, you could even get a balance transfer card to transfer all of your high-interest credit card balances onto it, but you must be able to afford to pay the entire balance off within the 6-18 month introduction rate period when your rate is at 0% in order to save money. Also, there’s a 3%-5% up-front fee that comes with balance transfer cards so be sure to incorporate this figure into the equation.

If you only need a reduction in interest rates on credit cards, in this case, consumer credit counseling will be your best option to get out of debt. If you can barely afford minimum payments or have already fallen behind on payments, consider a debt relief program.

Consumer Credit Counseling Complaints

Most of the complaints directed at consumer credit counseling companies that we see here at Trusted Company Reviews  relates to: 

  • Complaints regarding hidden fees and poor financial counseling (some companies will tell consumers that there are no fees but there is a “voluntary donation or contribution that must be paid” – and it usually consists of the first payment going all to fees! Carefully review the client agreement and look for wording such as “contribution,” “donation”, etc.. and stay away from any company that is asking for a voluntary contribution.
  • Complaints about creditors not getting paid on time, causing additional late fees and interest
  • Complaints about companies who pretend to be a credit counseling company but then enroll consumers into debt settlement plans
  • The biggest complaint has to do with creditors not accepting the proposed credit counseling plan and then the debt relief company just paying that creditor in full (verify which creditors accepted the plan and how much of a reduction you are getting on each payment)

Before enrolling in a credit counseling program, talk to a debt relief company that offers debt settlement and debt validation. Also, make sure to speak with a nonprofit credit counseling company to get your free consultation. And lastly, do your own research. There are excellent blogs online that educate consumers on ways to get out of debt without needing any type of debt relief or consumer credit counseling program.

CLICK HERE to Apply for Consumer Credit Counseling & Debt Relief Near Me